Who Will Acquire B & L?
At Press Time
Who Will Acquire B & L?
AMO Bids, but Big Shareholder Casts Doubts on Deal.
By Jerry Helzner, Senior Editor
■ An eleventh-hour bid of $45 a share in cash and an additional $30 a share in stock put Advanced Medical Optics (AMO) squarely in the picture as a potential buyer of eyecare rival Bausch & Lomb. But opposition to the offer from one of AMO's largest shareholders led to continuing uncertainty at press time as to who will eventually acquire B&L.
The large shareholder, ValueAct Capital, owns approximately 12.6% of AMO common stock, according to a recent regulatory filing. ValueAct questioned the ability of AMO management to successfully integrate a company twice its size while taking on additional large debt. ValueAct's opposition to the deal was cited as a major factor by a special committee of B&L's board of directors when it did not endorse the AMO offer.
The AMO bid was announced on July 5, the last day of a 50-day "go shop the company" period that had been agreed to by initial bidder Warburg Pincus and Bausch & Lomb. Warburg Pincus, a global private equity firm, had previously made a $65 a share all-cash offer that would have taken B&L private if completed. Warburg Pincus is entitled to a $40 million breakup fee if Bausch & Lomb ends up being purchased by a rival bidder.
AMO had earlier expressed interest in bidding for B&L, but AMO's ardor seemed to have cooled in late May. This was after the company undertook a costly global recall of its popular Complete MoisturePlus contact lens solution following reports linking the lens cleaner to 21 cases of Acanthamoeba keratitis, a serious corneal infection.
Though AMO and Bausch & Lomb compete in a number of areas, their businesses are also complementary in many respects.
According to AMO, a combination of AMO and B&L would:
► significantly expand AMO's global scale and scope.
► broaden and deepen AMO's product portfolio. B&L's strengths are in contact lenses and lens care, eyedrops for dry eye, allergies and inflammation, vitamins for ocular health, vitreoretinal surgical products and postoperative prescription products. Combining these with AMO's eyecare, cataract and refractive products and technologies would create a broad-based range of products.
► enhance AMO's ability to generate efficiencies and innovation.
"This is a truly unique opportunity that would enable AMO to accelerate our strategic goal of providing a full range of advanced technologies to address the vision needs of patients of all ages," said Jim Mazzo, AMO's chairman, president and CEO. "I am confident that delivering on this strategy will allow us to generate significant value for shareholders and create new opportunities for our combined employee base."
AMO said it is confident that it would be able to resolve any anti-trust concerns that might arise from a combination of the two companies.
Alcon Celebrates 60 Years
R&D Focus: Diseases of the Aging Eye.
By Jerry Helzner, Senior Editor
■ In 1947, two Fort Worth, Texas, pharmacists, Robert D. Alexander and William C. Connor, joined forces and the first syllables of their last names to incorporate the Alcon Prescription Laboratory. Their goal was to provide sterile, dependable, high-quality ophthalmic medications needed by doctors. From that small but ambitious start, Alcon has more than lived up to its founders' original aims. In 60 years, the company has grown into the global leader in eye care, with approximately 13,500 employees around the world and anticipated revenues approaching $5.4 billion this year.
As Alcon celebrates its 60th anniversary with events at company facilities around the world, company CEO Cary R. Rayment spoke with Ophthalmology Management about the enduring values that have led to Alcon's success and the company's bold plans for the future.
Just as Alcon itself is turning 60 this year, its focus is on the eyecare needs of the huge baby boomer generation, many of whom are also now turning 60.
"Over the next 5 years, we plan on spending approximately $3 billion on R&D," says Rayment. "About two- thirds of that money will be targeted to age-related eye diseases."
Rayment says the company's research effort has always had the goal of "meeting unmet needs." To that end, finding more effective treatments for retinal disease and dealing with both the symptoms and root causes of dry eye will be priorities in the coming years.
"We believe that there are great opportunities to develop better therapies for macular degeneration, diabetic macular edema and diabetic retinopathy," says Rayment. "We will be looking at a number of possible ways to make this happen, including internal development, partnerships and in-licensing."
Rayment says Alcon continues to believe in the potential of Retaane, which is being studied as a treatment for glaucoma and both the wet and dry forms of AMD.
Rayment also sees opportunity internationally, specifically in such emerging economies as China, India and Eastern Europe, where he notes that more advanced eyecare procedures, such as phacoemulsification for cataract removal and vitreoretinal surgery, will be used increasingly as medical care continues to advance in those areas of the world.
In looking at the keys to Alcon's continued growth and success, Rayment credits the values and principles established by the company's founders.
"They started with a real focus on the eyecare segment and a basic commitment to customer relationships, service and using sound science to bring innovative, high-quality products to the eyecare community," he notes. "That strong foundation has served us well and has been carried through to this day."
Rayment says Alcon milestones include the founders' 1953 invention of the basic eye dropper, which allowed eyedrops to be easily instilled into the eye; the 1989 purchase of CooperVision's surgical products division, which gave Alcon a full range of surgical products; the 1994 introduction of the AcrySof IOL brand, which has been continually expanded to encompass new generations of lenses; and the launches in the 1990s of Patanol anti-allergy medication and the Opti-Free line of contact lens care solutions.
Alcon CEO Cary R. Rayment
Rayment also takes pride in the fact that Alcon is a good corporate citizen. Through its Alcon Foundation, the company supports ophthalmic education, training and research, including more than 1,100 different medical missions that have brought humanitarian eye care to all parts of the globe. Alcon has also been named one of the best 100 place to work in the United States by Fortune magazine for 9 consecutive years.
|IN THE NEWS|
|■ Alcon to acquire Wavelight. Alcon, Inc. said it intends to acquire all of the outstanding stock of WaveLight AG through a friendly takeover process. WaveLight, based in Erlangen, Germany, develops, manufactures and markets refractive laser and diagnostic systems, including the Allegretto laser system for refractive eye surgery.|
The Allegretto laser has a global installed base of more than 800 units. Alcon said the addition of this advanced technology and the combination of the two companies' capabilities will reinforce Alcon's positioning with surgeons who perform both intraocular lens implantation and laser refractive surgery.
"This acquisition will provide additional clinical solutions and laser technology to better support our cataract and refractive customers," said Alcon CEO Cary Rayment.
"We are convinced that the combination of Alcon's global commercial infrastructure with WaveLight's technological capabilities will create the foundation for continued growth within the refractive surgery channel," said Max Reindl, WaveLight's CEO.
Reindl will continue as chairman of the WaveLight executive committee.
■ Monovision LASIK approved. The FDA has approved Advanced Medical Optics' (AMO) Advanced CustomVue Monovision LASIK, the first wavefront-guided laser vision correction procedure for the visual correction of myopic presbyopic patients, with or without astigmatism.
The Advanced CustomVue Monovision treatment is designed to improve both near and distance vision utilizing AMO's Advanced CustomVue LASIK technologies, including the Star S4 IR excimer laser and the WaveScan Wavefront and Iris Registration technologies, to first map and then custom-correct nearsightedness in the dominant eye and partially correct nearsightedness in the other eye. The procedure is individualized for the unique correction requirements of presbyopic patients with low to moderate myopia, with and without astigmatism. The result is a reduced dependency on reading glasses and contact lenses.
The FDA based its approval on clinical data from a multicenter clinical trial, involving 160 patients for up to 2 years. According to the clinical trial results, 6 months after being treated with the Advanced CustomVue Monovision procedure, 100% of patients achieved 20/40 or better BCVA at both distance and near.
■ Akorn files NDA. Akorn, Inc. has filed a New Drug Application (NDA) for Akten Ophthalmic Gel 3.5%, a topical ocular anesthetic formulation. The NDA was filed after a 209-patient, randomized, placebo-controlled clinical trial was conducted, which subsequently met the primary endpoints in all three dosing arms. Akten is projected to be launched in the first half of 2008.
Akten is a novel, unit-dose, preservative-free gel formulation intended to be used in any ocular procedure that requires a topical anesthetic agent.
Recall Bites AMO Bottom Line
Company Ready to Re-enter Multipurpose Marketplace.
■ Advanced Medical Optics, Inc. (AMO) said the costs and lost sales stemming from the global recall of its Complete MoisturePlus contact lens cleaner solution will create a bottom-line loss for 2007 and reduce profits in 2008. However, the company plans to re-enter the multipurpose lens cleaner market in late summer with a new "rub and rinse" formulation.
In late May, AMO voluntarily removed the widely used contact lens cleaning solution from the market, citing information received from the U.S. Centers for Disease Control and Prevention (CDC) linking the product to 21 cases of Acanthamoeba keratitis (AK), a serious corneal infection caused by a naturally occurring water-borne organism. In mid-July, the CDC said it had studied a total of 102 cases of AK and found that Complete MoisturePlus was the only lens cleaning product that could be directly linked to a "significant" number of those cases.
For 2007, the company now expects sales in the range of $1,050 million to $1,070 million and an adjusted loss per share in the range of $0.95 to $1.15. The company's guidance for 2008 is a range of $1,230 million to $1,250 million in sales and $1.55 to $1.75 in earnings per share.
"While the near-term financial implications of the recall are significant, I am confident that we have taken the appropriate steps and are now well positioned to turn our attention to re-entering the multipurpose market before the end of the year," said Jim Mazzo, AMO chairman, president and CEO.
AMO will soon launch a multipurpose product using an existing proprietary formulation approved by various regulatory agencies across the world, including the FDA. The company expects the solution to be marketed and sold globally under the company's flagship Complete brand name and to reinforce a rub-and-rinse regimen for what the company called "effective contact lens disinfection and comfort." The rub-and-rinse step is recommended by a number of eyecare professional organizations in their contact lens handling guidelines. Other makers of lens cleaning solutions expressed confidence in the safety of their so-called no rub products and said they will remain on the market.
|■ Alcon names CFO. Alcon, Inc. has named Richard Croarkin senior vice president and chief financial officer. Croarkin comes to Alcon from Nestle, SA, where he was executive vice president, finance, and chief financial officer of Nestle Waters North America.|
Croarkin joined Nestle Waters North America in 1994 and has overseen the finances of a business unit that has grown to $4.4 billion in sales. He was responsible for all aspects of finance, including financial planning, treasury, tax, accounting, controls, credit, information systems and acquisitions. Before joining Nestle, Croarkin worked for Pepsico for 11 years, where he served in a number of senior financial positions around the world, including as chief financial officer of Pepsi Latin America and Pepsi Canada. He started his career with AMAX, Inc. and worked in treasury, corporate development and planning. Croarkin is a 1976 graduate of Georgetown University with a degree in economics and received his M.B.A. from University of Connecticut in 1979.
■ Founder of Cornea dies. Frank M. Polack, M.D., a leader in establishing the Cornea Society and the founder of the journal Cornea, died at his home in Newberry, Fla., on July 9 after a lengthy illness. Dr. Polack, who was 78, was a former professor of ophthalmology at the University of Florida Medical School and had kept active in recent years as a consultant. He was also the father of Ophthalmology Management columnist Peter J. Polack, M.D.
■ Topcon OCT/camera approved. Topcon Medical Systems, Inc. said it has received FDA approval for its 3D OCT-1000, the world's first Fourier-domain OCT combined with a color nonmydriatic retinal camera. The product provides high-resolution cross-sectional imaging of the retina, which aids in the diagnosis and monitoring of a variety of pathologies, such as retinal detachments, macular holes, AMD and glaucoma. Topcon says the product features a true three-dimensional view of the mapped area and accurate retinal registration of the OCT and fundus images.
In addition, Topcon has launched a new, interactive Web site (www.topconmedical.com) that offers customers a more high-tech look and feel, new features, and that is significantly easier to use. OM
Ophthamology Management, Issue: August 2007